KINDSTAR GLOBAL (09960) proposes to acquire 100% equity of Guangzhou Kangcheng Weiye and Anchor Dx.

KINDSTAR GLOBAL (09960) announcement on September 20, 2024, the company, Kangsheng Wuhan Foreign sole proprietorship, the target foreign sole proprietorship Guangzhou Kangcheng Weiyi Biotechnology Co., Ltd., the target U.S. company AnchorDx Inc., Benchmark Healthcare (Cayman), Benchmark Healthcare (Hong Kong), the target foreign sole proprietorship domestic seller, WuxiAnchor, OrbiMed, Fan Jianbing, and Benchmark Healthcare (Cayman) preferred shareholders (excluding WuxiAnchor and OrbiMed) have entered into a transaction agreement. Accordingly, Kangsheng Wuhan Foreign sole proprietorship has conditionally agreed to acquire the total 100% equity interest of the target foreign sole proprietorship, Benchmark Healthcare (Hong Kong) and the target foreign sole proprietorship domestic seller have conditionally agreed to sell the total 100% equity interest of the target foreign sole proprietorship, and the company has conditionally agreed to acquire the total 100% equity interest of the target U.S. company, with a total transaction value of approximately 31.3 million US dollars. The transaction value will be paid by the group in the following ways: Kangsheng Wuhan Foreign sole proprietorship will pay cash to Benchmark Healthcare (Hong Kong) and the target foreign sole proprietorship domestic seller (in US dollars or RMB, as appropriate), using the group's bank borrowings and the net proceeds of the global offering's net proceeds, and issuing shares at cost to WuxiAnchor and OrbiMed under a general authorization. According to applicable Chinese laws, rules, and regulations, the operation of medical institutions, including providing clinical special inspection services in China, is restricted to Sino-foreign joint ventures (restricted business) or completely prohibited to foreign-owned enterprises (prohibited business), and imposes qualification requirements on related foreign owners (if applicable). The target variable interest entity group is mainly engaged in providing clinical tumor testing services (a type of clinical special inspection service), which is considered a prohibited business activity. Therefore, the target foreign sole proprietorship controls the target variable interest entity group entity through the existing target contract arrangement between the target foreign sole proprietorship, the target variable interest entity operating entity, and the current target variable interest entity registered shareholders (and obtains its economic benefits). Due to the acquisition, the existing target contract arrangement will be terminated, and a new target contract arrangement will be entered into by the target foreign sole proprietorship, the target variable interest entity operating entity, and the new target variable interest entity registered shareholders before completion. Under the new target contract arrangement, the target foreign sole proprietorship will continue to control the target variable interest entity group entity (and obtain its economic benefits). The board of directors believes that the target variable interest entity group entity and the target U.S. company are leading enterprises in the domestic field of early screening and early diagnosis of tumors, with leading professional technology, solid clinical trials, and industry-leading positions in research and development, product performance, and operational management. These acquisitions will bring significant strategic advantages to the group, including: 1. Quickly entering the major solid tumor testing areas such as lung cancer and gastric cancer, seizing market growth opportunities, expanding the group's business scope, and creating new growth points for performance. 2. Enriching the group's tumor early screening and early diagnosis IVD product pipeline, further promoting the construction of a "comprehensive, systematic, and advanced" specialty testing platform, achieving integration of the group's upstream and downstream industry, and development of both in vitro diagnosis (IVD) and laboratory developed tests (LDT) dual-track development; and 3. Through integration and synergy, enhancing the group's customer expansion capabilities in key hospitals, improving customer service efficiency, strengthening the group's market competitiveness and overall influence in the industry. Given the above circumstances, the target variable interest entity group entity and the target U.S. company are highly compatible with the group's long-standing characteristics of "specialized expertise and focus", bringing new development opportunities to the group in the field of specialty testing. The board believes that the terms of the transaction agreement and the proposed acquisition are fair and reasonable and in the overall interests of the company and its shareholders, creating greater long-term value for the group.